Just days after ruling out a December interest-rate cut, JPMorgan Chase chief U.S. economist Michael Feroli has changed his outlook again, reflecting how murky the economic picture has become heading into the final Federal Reserve meeting of the year.
Feroli had initially expected the Federal Open Market Committee to lower its benchmark rate in December. But following a pullback in 10-year Treasury yields and mixed signals on job growth and inflation, he told Bloomberg the Fed would likely stand pat until early 2026, possibly cutting rates in January and May instead.
Then came the Federal Reserve’s November Beige Book and a notable shift in tone from policymakers. Fed Governor Christopher Waller said in a recent speech that the latest data “leads me, at this moment, to support a cut in the FOMC’s policy rate at our next meeting on December 9 and 10 as a matter of risk management.” In response, Feroli’s team reversed course—again—predicting cuts in both December and January.
That back-and-forth underscores the uncertainty dominating the U.S. economy. Inflation’s trajectory remains uneven, hiring trends are ambiguous, and consumer behavior is mixed—all of which make it harder for policymakers to decide if and when to ease monetary policy.
The Beige Book itself offered little clarity. “Economic activity changed little on balance since the previous report,” the November summary began—echoing the language from October and September, when most Federal Reserve districts reported “little or no change.” Earlier reports throughout 2025 described small gains or slight declines, revealing an economy that has drifted sideways for much of the year.
Recent data showed consumer spending down overall, with higher-end retail sales holding up. Electric vehicle sales have dipped as federal tax incentives expired. Manufacturing “increased somewhat,” the Fed noted, though tariffs and trade-policy uncertainty continued to weigh on output. “Outlooks were largely unchanged overall.”
Oxford Economics said Wednesday the Beige Book “is unlikely to settle the debate between the hawks and doves on the Federal Reserve ahead of the December policy meeting.” The firm added that while employment was said to have declined, most employers appeared to be holding labor costs steady through hiring freezes and attrition rather than layoffs—avoiding the kind of permanent job losses that could trigger a deeper downturn.
Some analysts, including those at Capital Economics, are even considering the prospect of a tie vote at the December FOMC meeting, an unprecedented outcome. As of November 30, CME Group’s FedWatch tool placed the odds of a quarter-point cut at 87.4 percent, with 12.6 percent expecting no change.
The answer will arrive in just ten days.
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